Mexico auto sector to resume operations once U.S. industry gears up

© Reuters. FILE PHOTO: Mexico’s President Obrador holds a news conference in Mexico City

MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador said on Wednesday the domestic auto sector can resume operations shortly after the U.S. industry gears up from a coronavirus-led halt, to avoid further disruption to closely interconnected supply chains.

Most automotive plants in Mexico suspended operations in March to contain the spread of the coronavirus and in response to a supply shortage created by the outbreak.

Trade groups such as Mexican automotive industry association AMIA and truck manufacturing association ANPACT had called for the industry to be among those exempted from a government order to suspend all economic activity not deemed essential.

Lopez Obrador said the sector would be permitted to resume operations “three to five days” after their American counterparts restart production.

“In the United States, the automotive branch has been suspended,” he said. “Once they reopen it, they must have supplies that are produced in Mexico.”

Lopez Obrador’s announcement followed a meeting with industry representatives earlier this week, including officials from firms such as cement maker Cemex, conglomerate Grupo Alfa and glass producer Vitro.

The companies recommended that Lopez Obrador focus on reducing uncertainty and building confidence in the economy, according to a statement they released on Tuesday.

AMIA said the industry contributes 3.8% of Mexico’s gross domestic product (GDP) and is responsible for almost a million jobs, while ANPACT stressed the closure of the plants puts the supply chains in both Mexico and the United States at risk.

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